Archives : WEEKLY BEARISH ENGULFING - 13/12/2013.

WEEKLY BEARISH ENGULFING – 13/12/2013.

CORRECTION ON EXPECTED LINES.

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Finally on Monday, Market registered an all- time high level. Market was pumped up due to the surprise in election results, which was the reason why the Nifty finally managed to overcome life time high level of 6357. But the euphoria was short lived as the market started correcting, which was expected. It is not unusual to see the market correct after testing such critical levels; on the contrary it will make the market stronger. Support zone for the Sensex is between 20668 - 20636 and 6142 – 6140 for the Nifty.

 

 


WEEKLY BEARISH ENGULFING – 13/12/2013.

CORRECTION ON EXPECTED LINES.

.

Finally on Monday, Market registered an all- time high level. Market was pumped up due to the surprise in election results, which was the reason why the Nifty finally managed to overcome life time high level of 6357. But the euphoria was short lived as the market started correcting, which was expected. It is not unusual to see the market correct after testing such critical levels; on the contrary it will make the market stronger. Support zone for the Sensex is between 20668 - 20636 and 6142 – 6140 for the Nifty.

TECHNICALLY SPEAKING.

Sensex opened the week at 21416, made a high of 21483, low of 20692 and closed the week at 20715. Thus it registered a weekly loss of 281 points. At the same time the Nifty opened the week at 6415, made a high of 6415, low of 6161 and closed the week at 6168. Thus the Nifty closed the week with a loss of 91 points.

On the daily charts, Nifty formed a Bearish Belt Hold pattern on Monday, whereas the Sensex formed a black body candle. On Friday, both the indices formed a falling black body candle with a bearish gap between 20901-20867 for the Sensex and 6230-6208 for the Nifty. On the weekly charts, both Sensex and Nifty completed Bearish Engulfing pattern, which is a bearish reversal pattern. This week, Nifty registered a big Opening Black body Marubuzo, whereas Sensex made a big black body candle. Thus both daily as well as weekly charts suggest bearishness in the near term.

After registering life time high levels, both Sensex and Nifty started correcting. In the immediate short term, Sensex is correcting the upward rally from 20137 to 21483 and Nifty from 5972 to 6415. The relevant Correction levels are Sensex 20969-20810-20651 and Nifty 6246-6193-6141.

If the correction deepens, then we need to look at intermediate rise from 19264 to 21483 for the Sensex and 5700 to 6415 for the Nifty. Accordingly, the Correction levels are placed at Sensex – 20636-20374-20112 and Nifty 6142-6058-5973.

Market will encounter a Support zone between Sensex 20668 – 20636 and Nifty 6142 - 6140.  This support zone is due to the confluence formed by 61.8% Retracement (Sensex – 20651 and Nifty 6141) of the immediate rise and 38.2% Retracement (Sensex – 20636 and Nifty – 6142) of the intermediate rally, besides the presence of the medium term moving average support of 50dma (Sensex – 20668 and Nifty – 6140).

From a longer term perspective, Market has a strong support zone between Sensex 19444-19264 and Nifty 5738-5688. This is a confluence zone formed by the presence of Bullish Rising Gap between Sensex 19444-19293 and Nifty 5738-5688, intermediate low of Sensex 19264 and Nifty 5700 and the 50% Retracement level which is at Sensex 19385 and Nifty 5730. Thus this is a strong Support Zone and a breach of this support zone will end the current uptrend.

This week, both Sensex and Nifty just closed below the short term average of 20dma (Sensex – 20770 and Nifty – 6175) and are very near to testing the medium term average of 50dma (Sensex – 20668 and Nifty – 6140). Indices continue to remain above the long term average of 200dma (Sensex – 19649 and Nifty – 5884). Thus the trend in the short term timeframe has turned down, whereas the trend in the medium and long term timeframe continues to remain positive.

MACD and ROC are both positive and continue with their Buy signal. RSI (48) has given a fresh Sell signal suggesting bearish momentum. MFI (38) continues to remain below the equilibrium line, suggesting money flowing out. Stochastic Oscillator continues in Sell mode as %K (56) is below %D. ADX has fallen to 16, suggesting that the market is in consolidation mode. The Directional Indicators continue in Buy mode as +DI is above –DI, but they are converging. OBV continues in Sell mode forming lower top lower bottom formation. Thus Oscillators are hinting towards bearishness in the short term.

The Nifty O.I. PCR has reduced to 1.05. For the current series, highest Open interest build up has shifted to 6300 Call and 6000 Put. This suggests that the market expects a trading range with support coming in at 6000 levels and resistance around 6300 levels. Also Friday saw large amount of Call writing at 6200 levels. This suggests that the market will find immediate resistance around 6200 levels.

The Trendline Resistance for the Sensex is at 21875. Trendline Support is at 20535.

The Trendline Resistance for the Nifty is at 6534. Trendline Support is at 6101.

For the week ahead, Sensex will find Support at 20493-20137-19826 and will find Resistance at 21039-21321-21650.

For the week ahead, Nifty will find Support at 6079-5972-5877 and will find Resistance at 6252-6342-6443.

INDEX LEVELS:

S3

S2

S1

CLOSE

R1

R2

R3

Nifty

5877

5972

6079

6168

6252

6342

6443

Sensex

19826

20137

20493

20715

21039

21321

21650

THIS WEEKS RECOMMENDATIONS:

STOCK

CMP

SL

Tgt-1

Tgt-2

Sell UltraCem

1800

1843

1731

1658

Sell DrReddy

2400

2440

2329

2256

Sell Titan

220

226

211

201

Sell LiCHsg

198

205

187

176

Sell GodrejInd

259

266

248

237

WATCH OUT FOR:

Titan

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